Under Section 42(1) of the Reserve Bank of India Act, 1934, every scheduled bank must maintain a cash reserve with the Reserve Bank. Within which statutory band can the Reserve Bank prescribe this cash reserve ratio?

Section 42(1) of the Reserve Bank of India Act, 1934 requires every scheduled bank to maintain with the Reserve Bank an average daily balance the value of which shall not be less than three per cent of the total of its net demand and time liabilities in India, and empowers the Reserve Bank, by notification, to require a higher percentage not exceeding fifteen per cent. The statutory band is therefore three per cent to fifteen per cent, within which the cash reserve ratio is fixed from time to time. Four per cent is merely a currently operative level and not the statutory ceiling, while twenty-five per cent belongs to the statutory liquidity ratio under the Banking Regulation Act. The correct band under section 42(1) is three per cent to fifteen per cent.